The number of forced home auctions being held online by banks in Cyprus is seen picking up as buyers in the island-state become more familiar with platforms like Bank of Cyprus’ REMU site, according to the European Commission.
In its latest post surveillance report on Cyprus, the EU points out that the online auction is currently the only sale method applied by banks in Cyprus.
“In Q2 2022, 105 properties (mainly residential property and farmland) were sold (as compared to 53 in Q1), 51% of which were bought by the mortgage lender as in previous quarters. Total auction success rate for banks (measured as the properties sold in auction/properties sent to auction) stood at 9.7%,” the report said.
“The use of online auctions is expected to remain high, as the spectrum of users and familiarity with the platform continue to grow, further helping
reduce the NPL stock in Cyprus,” it added.
Real estate at risk
Brussels also went on to say that Cyprus Asset Management Company
(KEDIPES) is seen facing headwinds due to the adverse economic conditions, such as inflationary pressures and the impact from Russia’s invasion of Ukraine, in what could ultimately weigh on the real estate market.
“Future claims under the asset protection scheme (APS) with Hellenic Bank, even if mainly related to retail/household exposures, may be affected by
higher defaults (22). All these factors could affect the ability of borrowers to service their restructured loans or reach consensual solutions nd could also reduce external demand for real estate and land development,” it added.
Bank of Cyprus properties for sale
Meanwhile, the Bank of Cyprus wound up another deal recently in its drive to reduce bad debt sitting on its balance sheet.
The lender said it completed the sale of the Helix 3 project, a loan portfolio with a gross book value of 555 million euros, to funds managed by Pacific Investment Management Company LLC.
The debt was sold for 350 million euros.
The transaction is capital accretive, with a net positive impact on the group capital ratios of circa 50 basis points, the bank said.
As of the end of September 2022, the group’s CET1 ratio and total capital ratio
stood at 14.7% and 19.8% respectively.
“Since the peak in 2014 and pro forma for Helix 3, the stock of NPEs has been
reduced by 14.5 billion euros, or 97 percent and the NPE ratio by over 58 percentage points from 63 percent to less than 5 percent,” the bank added.